I think prof. Mankiw has concluded he won’t be seeking any grants from the Obama administration:
Feel free to insert this into President Obama’s next speech:
“There has been a lot of talk lately about taxing Cadillac health plans. Well, I have thought about this idea, and I have talked with my economic advisers, and we have decided that it indeed makes a lot of sense.
“Now some of you may wonder whether endorsing this proposal breaks my pledge not to raise taxes on the middle class. After all, you don’t need to be rich to drive a Cadillac, and you don’t need to be rich to have a Cadillac health plan. So, hereafter, I will refer to them as Rolls Royce health plans.
“Seriously, though: Yes, it is a tax increase on the middle class. When I said during the campaign that I would raise taxes only on the rich, I meant it. Or at least I wanted to mean it. But these damn economic advisers I have keep bugging me about the laws of arithmetic. And, you know, they are right. I am more interested in expanding entitlements than reigning them in, and so I don’t have much choice but to raise taxes on the vast majority of Americans. If you think this Cadillac tax is the end of it, you just wait.
“I also know that this tax offends some of my supporters in the union movement, who now enjoy the benefits of Cadillac health plans. But how much do you guys expect from me? I have already thrown you the bone of a completely unjustifiable tariff on Chinese tires, risking a trade war in the midst of a global economic downturn. You guys should be happy with that. Will you please get off my case?
“Finally, I need to make an apology. No, not to Europe for Bush-era foreign policy this time. But to Senator McCain. During the campaign, I lambasted you for proposing to tax health insurance benefits. I knew at the time that your goals were laudable–to finance tax credits for lower income families and to reign in tax incentives for excessive insurance. And indeed your proposal was not very different from the tax on Cadillac plans being considered in Congress right now and that I will gladly sign into law. But the issue offered just too good of a sound bite to give up. Now that I am safely in the White House, however, I am man enough to admit that Senator McCain was right all along, and I was wrong. Gosh, it feels good to get that off my chest.”